Officials in Seattle and Washington state clash over business tax to address homelessness crisis

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Seattle City Council Kshama Sawant in her office at City Hall. (GeekWire Photo / Monica Nickelsburg)

Officials in Seattle and Washington state are wrestling over a proposed tax on companies like Amazon and Microsoft that would raise millions to address the homelessness crisis gripping the region.

The dispute centers on a bill that passed out of committee in the state legislature Friday that would authorize King County — home to the Seattle-area tech hub — to tax the payroll of employees earning more than $150,000 per year at medium and large companies. Seattle Mayor Jenny Durkan initiated the legislation and estimates it would raise $121 million annually for affordable housing and homeless and mental health services.

As the bill was advancing in the House, Seattle City Council member Kshama Sawant announced a plan to head off one of the more controversial elements of the tax debate. Sawant plans to introduce a measure Monday that would block Washington state from including a provision in the bill that preempts the taxing authority of cities in King County. Preemption is not included in the current version of the bill, but some in the business community would prefer it to be added.

“It is a disgraceful act by politicians, some of whom identify as progressive, to even talk about a preemption in a state with the nation’s most regressive taxation,” Sawant said Friday during a press conference.

Following her re-election in November, Sawant has doubled down on her campaign to tax Amazon and the “billionaire class.” Sawant called the state bill “extremely inadequate” during the press conference at Seattle City Hall Friday, but said she would support any levy on big business, as long is it doesn’t prevent the City Council from passing its own, additional taxes.

“We have the responsibility to fight for the maximum possible progressive revenues that we can achieve at the city level,” she said.



The desire for a preemption clause is motivated, in part, by Seattle’s prior attempt to tax big business. The Seattle City Council passed a per-employee tax on Seattle’s top-grossing businesses in 2018 to fund affordable housing and homeless services. The business community fought the so-called head tax, leading the council to ultimately repeal the legislation just a few weeks after passing it.

If preemption were added to the bill under consideration in Olympia, it could prevent the Seattle City Council from taking another swing at taxing big business, which Sawant has pledged to do. Even without preemption, the biggest technology companies in the Seattle area are supporting the regional tax. Amazon, Expedia, Microsoft, Zillow, and others sent a joint statement to lawmakers in Washington state in support of legislation this week.

Durkan celebrated the bill’s passage out of committee in a statement Friday.

“We proposed a bold progressive business tax to help our most vulnerable communities in King County,” she said. “There is a broad coalition of supporters ready to take immediate action, including County and regional leaders, large and small businesses, labor leaders, advocates and service providers. It shows we can come together and take progressive action.”

The bill will now go through “a robust and thorough process in the State Legislature,” she added.

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